TORONTO – If a company’s share price is any reflection of market perception, there’s no mistaking some skepticism surrounds Cenovus after it acquired the majority of ConocoPhillips’ oilsands and natural gas assets in Alberta for $17.7 billion.

The stock closed at $14.71 on Tuesday, $1.29 below the pricing of the $3-billion equity issue announced with the deal late last month.

Listening to Cenovus president and CEO Brian Ferguson, however, it’s clear the market has not yet fully grasped the deal and what it means for Cenovus — and Canada’s oilsands — going forward.

And that’s what it’s all about: looking ahead.

“I’m not interested in pressing the rewind button,” Ferguson said Tuesday when asked if the purchase was a move to rebalance Cenvous’s assets to where Encana was before the two companies split in 2009.

Asked if the market may consider the deal a little too complicated, given the share price decline, Ferguson likened it to threading several needles at once, with a single thread. The last needle to be threaded is the asset disposition.

Ferguson was also not interested in calling the acquisition — which followed other U.S. and international players selling oilsands assets — an indication the oilsands has fallen to the bottom of the energy investment pecking order.

“This allows us to consolidate our top-tier oilsands position and allows us to now be in complete control of our future in the oilsands,” he told reporters at the annual investment symposium hosted by the Canadian Association of Petroleum Producers and Scotiabank.

The idea of controlling the asset base, including associated infrastructure, was pioneered by the late Bob Dixon, who ran a company called Merland Explorations in the late 1970s and early 1980s. Unlike many before him, and many since, Dixon saw the oilpatch as a manufacturing operation that could be optimized through economies of scale and cost control.

The operating philosophy was adopted by those who worked for Dixon, including Clayton Woitas, Alan Markin and Keith McPhail.

Had Dixon been in the room Tuesday, he likely would have been nodding in agreement with Ferguson.

But where Dixon might have viewed controlling assets and infrastructure as the key to success — rather than having a number of partners to manage — Ferguson and Cenovus are taking this to a different level; one that will surface greater value for the assets and ultimately, for shareholders.

Its deal is all about creating greater efficiencies by seeing the business as a manufacturing operation — or oil factories as Ferguson calls them — and capitalizing on opportunities presented by controlling an oilsands asset now producing 390,000 barrels a day.

But more than that, it’s about capitalizing on cost control and the application of new technologies. Data analytics or Big Data. Take your pick.

On the cost side, Ferguson said he has fielded calls from overseas investors asking how the oilsands — and Cenovus in particular — has reduced costs to where “high-cost producer” no longer applies.

Cenovus’s cash costs, for example, were covered at a WTI price of US$25 to $35 a barrel last year. It covered capital expenditures and dividend payout at an average WTI price of US$43.

“There has been a step change in terms of competitiveness and cost efficiency of the Canadian oil and gas sector, particularly in the in the oilsands,” said Ferguson.

“The thing that is incredibly exciting, I think, is the application of new technologies. We are only starting to scratch the surface with big data, data analytics, automation.”

The facilities associated with the daily oilsands production of 390,000 barrels generate one million data points every day. Capturing, analyzing and interpreting that information has huge implications — all positive — for the entire oilpatch, not only oilsands producers.

“Data analytics will be able to enhance predictability, increase capacity utilization by one or two per cent, increase revenue because we increase production, but we also drive down operating costs. That’s just one example,” said Ferguson.

That’s the future.

But Cenovus’s share price is evidence the market hasn’t seen it the same way. It’s instead stuck on the fact Cenovus still has to sell assets to close the last 25 per cent of the financing loop.

The assets it has on the block could raise $3.6 billion, though that number could be higher, CIBC has said.

And, despite what some might think, there is not much on the market in terms of asset dispositions in Alberta.

“The typical inventory is more like 200,000 barrels a day of oil equivalent/d of properties at any one time,” said Ferguson. “Prior to our announcement of Suffield and Pelican going on the market, there was about 50,000 barrels a day on the market, so we have doubled that to 100,000. It’s not an oversupplied market.”

If the laws of supply and demand hold, scarcity usually means higher prices.

There also doesn’t seem to be enough attention paid to the opportunities that come with the acquired Deep Basin assets, which were not an area of focus for ConocoPhillips.

CIBC World Markets, in a research note, said the acquisition gave Cenovus a position in the Deep Basin that’s 50 per cent larger than that of Tourmaline, which is producing twice as much, and from a smaller footprint.

Ferguson said the plan is to grow production from that area by 40 per cent over the next three years.

Some have pointed out some aspects of the deal are a bit unconventional — even complicated — such as the five-year payout (on a quarterly basis) to ConocoPhillips on a portion of production, when the price for Western Canada Select exceeds $52 a barrel (Cdn). It doesn’t include new barrels that are added.

Critics have said that takes away the upside for Cenovus, when prices rise. In reality, it works out to about 15 per cent going to ConocoPhillips. The company retains 85 per cent of the price rise.

Then there’s the leverage factor.

Even then, it’s interesting to note three agencies — Standard & Poors, DBRS and Fitch — have given Cenovus investment grade credit ratings on its debt. Moody’s, which downgraded the company’s debt to below investment grade in February 2016, has not changed its position.

The $3.9 billion Cdn debt issue that closed Friday, as part of the deal, was oversubscribed.

What all this suggests is Cenovus is firmly in ‘show me’ mode.

And while it might be frustrated the market isn’t recognizing what it accomplished to position the company to take a swing at a $17.7-billion deal in a very tough market, Cenovus’s board and management have been living with the idea of this deal since last October.

The market and all the other stakeholders have had less than two weeks to figure it out.

And if ConocoPhillips opts to sell its Cenovus shares once the hold period expires, that could also be putting downward pressure on the price, which is entirely out of Cenovus’s control.

A year from now, at the next CAPP Scotiabank investment symposium, it’s a safe bet the ‘show me’ narrative will have become moot.

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